Egypt Says No Gas Deals With Israel Until Arbitration Cases Resolved

Any future agreement on importing Israeli energy must also add 'value,' energy minister says in Reuters interview

File photo: An Israeli natural gas platform in the Mediterranean Sea.

Egypt will not issue permits to companies to import natural gas from Israel as long as arbitration cases with its neighbor remain unresolved, Egypt’s energy minister said on Monday.

Energy Minister Tarek el-Molla said for new Israeli import deals to be signed these arbitration cases would have to be resolved and the deal would have to “add value.”

In 2015, the International Chamber of Commerce ordered Egypt to pay $2 billion in compensation after a deal to export gas to Israel via pipeline collapsed in 2012 due to attacks by insurgents in Egypt’s Sinai Peninsula. Egypt, which has turned from a gas exporter to a net importer, is challenging that order through arbitration.

Egypt issued a law this year allowing private firms to import gas directly, potentially unlocking a deal to tap Israel’s offshore fields Tamar and Leviathan as Israel seeks export markets. Officials from the Israeli fields recently visited Egypt to negotiate possible deals.

“Delegations [from Israel] are healthy as it means there are discussions and negotiations, but they have to meet the conditions put by the government as that is only fair,” said Molla on the sidelines of an energy event in Abu Dhabi.

There was no immediate comment on the minister’s remarks from Israel, which has said it is awaiting the arbitration payment.

The Sinai pipeline line attacks halted Egyptian supplies of gas to state-owned Israel Electric Corp., forcing it to revert to more expensive diesel and fuel oil to drive its generators.

Asked about gas imports from Qatar, Molla said: “We are importing from traders, we don’t know where they source their gas from, this is not our problem.”

Egypt has Saudi Arabia and several other states in cutting ties with Qatar, accusing Doha of backing terrorists, a charge Qatari officials deny.

Separately, Molla said the Egyptian General Petroleum Corporation would announce a bid round before the end of this year to offer nine or 10 oil and gas blocks. He also said he expected first gas from Egypt’s giant offshore Zohr field in the Mediterranean by the end of 2017.